Which of the following supply chain strategies would be most appropriate for the two product families?

A company produces and distributes a family of soft drinks in a single country. It has developed and will introduce a new family of soft drinks for weight- and health-conscious individuals. There currently are no competitors with nationwide distribution for this category of soft drinks.

Which of the following supply chain strategies would be most appropriate for the two product families?
A . Produce both product families to forecast and push through the distribution system.
B . Produce both product families only after receipt of a distributor order.
C . Produce the current product family to forecast and the new product family to order.
D . Produce the current product family to order and the new product family to forecast.

View Answer

Answer: C

Explanation:

Given the context of introducing a new product family with no existing competitors and uncertain demand patterns, the most appropriate strategy is to:

Current Product Family (To Forecast): Continue producing the established product family based on demand forecasts. This approach leverages historical sales data and existing market understanding to maintain efficient production and distribution.

New Product Family (To Order): Produce the new product family only after receiving orders from distributors. This minimizes the risk associated with overproduction and inventory holding costs for a new product with uncertain demand.

Producing both product families to forecast (A) or to order (B) does not account for the differing levels of market maturity and demand predictability. Producing the new product family to forecast

(D) would be risky due to the lack of historical data and demand uncertainty.

Reference: "Supply Chain Management: Strategy, Planning, and Operation" by Sunil Chopra and Peter Meindl. APICS Dictionary, 16th edition.